“Call me Goldy.” The Tale of McDonnell’s Black Whale – the Captain Ahab like obsession with pursuing more and more ways to spend more and more money on transportation in the mistaken belief it will leave you with some great legacy – would have been fascinating to any political Herman Melville. The Governor’s idea, metaphorically, is to use all that whale oil in the black asphalt paving that will be required (hence the Black Whale, not that I was making some Django Unchained thing).

But the real story of the upcoming 2013 General Assembly Session is not one but three issues triangulating Virginia governance right now, at the heart of the real meat of the upcoming Governor’s race as well: Transportation, Medicaid and Education.

To be sure, the optics of the 2013 GA Session and the Governor’s race could very well be dominated by other issues as has often been the case over the years: abortion rights, gun rights, taxes, racial issues, religious issues, voting rights, what have been labeled by some political analysts as the “wedge issues.” They are all important, indeed gun rights may be the sleeper issue of 2013 right now for Virginia politics given what may or may not come out of the Biden Commission discussion of the matter in terms of White House legislative proposals. “Gun control” has not been a real issue in a VA Governor’s race since 1993. It could be this year. Big time.

BUT these “wedge issues”, while important both as a general matter in terms of state policies on significant concerns and as an issue of particular concern to a key voting bloc, ARE STILL SECONDARY TO THE BIG THREE in terms of fundamental shaping of state government: Roads, Medicaid, Education. These are the three Moby Dicks bearing down on the Ship of State.

Governor McDonnell started out by making his first year about keeping the big money campaign promise: the near $1 Billion in road money he claimed could be reaped by privatizing the state’s ABC operations. It proved a complete fisherman’s tale.

Since then, the McDonnell Administration has been a non-stop Willie Wonka factory of chocolate covered transportation spending proposals, every form of toll and fee and borrowing and borrowing known to Virginia governance. Except for an effort to sell the silverware dating back to the 1700’s over at the Governor’s Mansion, Mr. McDonnell has been going about fixing transportation – and I mean this respectfully – ass backwards.

McDonnell sees the issue as MORE MONEY.

BUT THIS IS A DERIVATIVE MATTER.

Right now in Virginia, the transportation issue is more basic: Namely, do we need to change from the 1920’s philosophy of funding transportation with USER fees?

In many respects, we already have: In 1986, Governor Baliles got the General Assembly to add a half-cent to the sales tax to exclusively fund transportation projects. This has changed the mix along with improved MPG’s among other things. Terry MAC and the electric car gurus, along with cars running on natural gas and hopefully more public transit, will further change the revenue generating mix.

But as a legacy matter, Baliles’ folks never pitched his vision as a new philosophy, only a new transportation levy using a sales tax, first in the nation.

Big mistake really. This is why he got no enduring credit from the public and has never run again for higher office.

Yet, to give him his due, he was, in effect, saying this: The user fee concept – gas taxes where seen as a user fee – is not going to be enough in the future to fund the state’s transportation grid.

I am not sure he was right then, or even now: But I do think he was being very perceptive as regards the fundamental issue on transportation in the coming years. There is a vision there. He never got his due. He should have.

Philosophically, the gas tax became the main source of road money in the 1920’s when Harry Byrd got the state, in a referendum, to reject higher debt for higher gas taxes so we could go on a pay as you go basis for the most part. Less debt, higher taxes.

It defied the politics of the age, or so the experts thought. But look around America at the time: Byrd had reason to know he could win the debate. Other states had gone the same route.

Now comes 2013.

THE REAL TRANSPORTATION issue right now is the following: Is the User Fee approach still the one we want, indeed is it still viable? Or was Baliles ahead of his time in that regard?

I don’t know: but it is the KEY TO NOT ONLY TRANSPORTATION. Why? Because the sales tax was created to FUND EDUCATION IN VIRGINIA, at least for the most part. Making the sales tax NOW also pay for transportation funding IN THE FUTURE fundamentally impacts education funding as well.

Already, we have a proposal to scrap the gas tax and go to fully funding transportation with the sales tax. That isn’t going to fly: but at least it does raise the basic philosophical issue.

THE FAILURE TO FIRST ENGAGE THE STATE IN THIS PHILOSPHICAL DEBATE IS GOVERNOR MCDONNELL’S BIG TRANSPORTATION MISTAKE.

McDonnell sees the transportation issue as trying to find more and more billions by whatever new borrowing, new toll, new general fund money redistribution, he can come up with. LIKE CAPTAIN AHAB, he is obsessed with with pursuing something out of King Lear.

Instead, what McDonnell should do, what will be of the most benefit and give him a real legacy, is to engage the state the way Harry Byrd did, but Baliles did not: Namely, how do we, as Virginians, want to solve our transportation problems?

This is key because It plays into the other two Moby Dicks headed at us: the problems in EDUCATION and the GROWING COST OF MEDICAID.

Let’s understand the politics. The business community’s first priority is transportation. McDonnell knows this, he wants their backing when he runs again. Medicaid is a huge issue for Democrats: it goes to the heart of the party’s philosophy, it is important to the President indeed key to Obamacare in many respects. However, the Medicaid issue has been made hugely more complicated by part of Supreme Court Chief Justice Robert’s opinion upholding Obamacare. He changed the game big time when he said Uncle Sam couldn’t punish states that rejected the President’s new Medicaid proposals.

Last, but actually first to the future of the state and nation is Education. Contrary to what our politicians have been saying, we are in serious need of a real reformer as Governor. Our school facilities are far worse off than our roads: and unless they get upgraded, our kids can not compete with the Chinese and others, it is that simple. This is something Bush and Obama, Reagan and Clinton all agreed with. ALL.

But we have flunked badly there, the average school building in Virginia and America almost old enough to qualify as an historic structure under state and federal law!! You can not get a 21st century education in a school building built in the 1960’s.

Then comes all the focus in years past on testing and more testing and more testing and more …testing: it ain’t working. The whole SOL regime needs reforming. Then comes the huge increase in administrative costs, often hidden by clever accounting tricks. Take Richmond for instance. Watch the coming battle over the school budget in my city.

It is a metaphor for what is driving down the middle class and blocking the poor from getting out of poverty.

But while fixing the education situation is not just about money – in some respects it doesn’t require any new money at all – in the long run, the state is going to have to figure out ways to provide greater resources to localities in this area and perhaps directly to students as I see it.

THERE THEY ARE: The Big Three drivers of spending at the state level not counting all the mandatory and other stuff paid for out of general or special funds. Roads, Medicaid and Education have a lot of discretion over time. They are competing right now for the same dollar.

With all due respect to Governor McDonnell – who has worked with Warner and Kaine and Cantor in trying to fix the school facility issue with a novel legislative proposal at the federal level – he is being penny wise and pound foolish with his Captain Ahab obsession.

RATHER, HE NEEDS TO LEAD A PUBLIC DISCUSSION SO THE PEOPLE CAN WEIGH ON THE MATTER.

Harry Byrd did it: and the people defied the experts by choosing higher user fees tied to transportation usage.

Baliles did not trust the people: he ran against raising taxes, and then reversed himself overnight as opposed to going to the people. If he had, he might be in the U.S. Senate today.

Baliles had vision, but not enough faith in the public.

MY PROPOSAL: Roads, Medicaid and Education are huge policy questions for state politicians to decide, not federal judges or even Medicaid.

Yes, the federal government plays a big role here, we have a federal gas tax, Medicaid is a federal/state partnership, and Education too has federal money component. But by and large, these are issues for the state to decide, for Virginia as a society to decide.

My own preference, given the state of our politics today, is to do what proved successful for several generations: use a statewide referendum to give the public a chance to gridlock on transportation. We have not done this for nearly a century.

But you say: The public may say NO to even the smallest fix. Sure, that is possible. By law, any referendum is advisory and moreover, how would be any worse off with a referendum, regardless of the results?

To me, it is all upside. Governor McDonnell could leave the debate to Cuccinelli and McAuliffe. Or McDonnell can help the next Governor out by taking the leadership role today.

In my view, USER FEES must play a role in any fundamental solution. Scraping them makes no sense. But at the same time, the equation did change in 1986. So we need to harmonize the situation in such a way that works for education and Medicaid as well.

Unless Governor McDonnell sees this, he will just be playing Captain Ahab for the rest of his tenure in office.